Chairman, MD, Directors or Company Secretary cannot be summoned without specific allegations

In Ravindranatha Bajpe vs Mangalore Special Economic Zone Ltd. & Others, the first class magistrate had issued summons against the Chairman, MD, Directors of a company accused of offences punishable under Sections 406, 418, 420, 427, 447, 506 and 120B read with Section 34 IPC. The said order was quashed by the Session Court and on appeal High Court agreed with the Sessions court.

The Supreme Court referring to judgments in GHCL Employees Stock Option Trust v. India Infoline Limited, (2013) 4 SCC 505; and Sunil Bharti Mittal v. Central Bureau of Investigation, (2015) 4 SCC 609 held that, in the order issuing summons, the learned Magistrate has to record his satisfaction about a prima facie case against the accused who are Managing Director, the Company Secretary and the Directors of the Company and the role played by them in their respective capacities which is sine qua non for initiating criminal proceedings against them. Looking to the averments and the allegations in the complaint, there are no specific allegations and/or averments with respect to role played by them in their capacity as Chairman, Managing Director, Executive Director, Deputy General Manager and Planner & Executor. Merely because they are Chairman, Managing Director/Executive Director and/or Deputy General Manager and/or Planner/Supervisor of A1 & A6, without any specific role attributed and the role played by them in their capacity, they cannot be arrayed as an accused, more particularly they cannot be held vicariously liable for the offences committed by A1 & A6.

From the order passed by the learned Magistrate issuing the process against the respondents herein – accused nos. 1 to 8, there does not appear that the learned Magistrate has recorded his satisfaction about a prima facie case against respondent nos. 2 to 5 and 7 & 8. Merely because respondent Nos. 2 to 5 and 7 & 8 are the Chairman/Managing Director/Executive Director/Deputy General Manager/Planner & Executor, automatically they cannot be held vicariously liable, unless, as observed hereinabove, there are specific allegations and averments against them with respect to their individual role. Under the circumstances, the High Court has rightly dismissed the revision applications and has rightly confirmed the order passed by the learned Sessions Court quashing and setting aside the order passed by the learned Magistrate issuing process against respondent nos. 1 to 8 herein – original accused nos. 1 to 8 for the offences punishable under Sections 427, 447, 506 and 120B read with Section 34 IPC.